Cognitive impairment frequently occurs in late-life depression (LLD), which increases the risk of dementia, mortality, and medical comorbidity. While cognitive impairment secondary to depression may resolve after successful treatment, persistent cognitive impairment or cognitive decline may occur in some patients even after remission from depressive symptoms. Individuals with cognitive decline over years have an increased risk of developing either Alzheimer's disease or vascular dementia. Identifying individuals who are at risk for developing cognitive decline is vital for early intervention strategies. Therefore, the long-term goals of the proposed project are to better understand the neural mechanisms linking depression and cognitive impairment, to establish biomarkers for early identification of depressed individuals at risk for cognitive impairment, and to understand the neural plasticity of LLD with and without cognitive impairment following prevention programs and clinical interventions. Our preliminary study indicates that reduced dorsal anterior cingulate (dACC) activation during target detection is associated with future cognitive decline in LLD. Reduced dACC- hippocampus connectivity is also found in LLD patients with cognitive impairment. Given that the dACC is one of the regions that is involved in both AD and depression, and because deficits in this region can result in broad abnormalities in functional connectivity across affective and cognitive networks in depression, we hypothesize that aberrant dACC activity (i.e., reduced dACC activation and reduced hippocampus-dACC connectivity) will predict cognitive decline in LLD. To test this hypothesis, we propose a two-year longitudinal neuroimaging study in 140 medication-free LLD patients. The objectives of this proposal are to investigate the neural mechanisms in LLD associated with cognitive decline and to examine whether our proposed imaging marker can predict which individuals are at a high risk of cognitive decline. All participants will be scanned during a resting state and during a simple target detection task at baseline, and at year 2. Our specific aims are: 1) to characterize the cognitive profile associated with reduced dACC activity in patients with acute LLD; 2) to examine whether reduced dACC activity at baseline predicts two-year cognitive decline; and 3) to examine the association between two-year changes in cognition with two-year changes in brain activation and functional connectivity in LLD patients. We hypothesize that LLD patients with reduced dACC activity will have lower cognitive function at baseline and greater cognitive decline over the two-year follow-up period. The proposed research is innovative because we plan to characterize a clinical profile in LLD based on functional activation pattern. The approach will stimulate future brain-based classification studies to predict individuals' clinica status based upon brain activation. The proposed research is significant because positive outcomes of the study will potentially assist clinical identification of LLD individuals who are at risk of cognitive decline. The dACC dysfunction pattern may also serve as a neural marker to monitor clinical intervention.